Centre says Telangana financially strong with healthy GDP- debt ratio, AP worst

Hyderabad: In a major boost for the Telangana government, the Centre on 4 February said the state's financial condition was "good" when compared to other states in the country. This must have come as music to the ears of Chief Minister K. Chandrasekhar Rao whose TRS government has been accused of pushing into a ‘debt trap’ since it took over in 2014.

The Centre and state governments' financial health is measured by their debt to GDP ratio as per Fiscal Responsibility and Budget Management (FRBM)norms. The FRBM review committee, headed by N.K. Singh, has prescribed a certain ratio to determine the financial health of the governments. The financial condition of the Central government will be termed 'good’ if the debt to GDP ratio by 2023 is less than 40 per cent, while for the states it is 20 per cent. Besides, the consolidated debt to GDP ratio of the Centre and state governments should not exceed 60 per cent.

The committee recently submitted a report to the Centre on the debt to GDP ratio of the governments. It said that Telangana’s debt to GDP ratio is only 17 per cent, lower than the prescribed 20 per cent limit. Meanwhile, neighbouring Andhra Pradesh fared worst at 31.6 per cent, the third-highest in the country, raising alarm bells on the deteriorating financial condition of AP.

TRS working president and IT minister K.T Rama Rao hailed the FRBM report and took a dig at Opposition Congress and BJP for leveling false allegations against TRS government for pushing Telangana into a ‘debt trap’. He tweeted, “BJP & INC leaders who level random allegations on Telangana’s borrowings need to educate themselves better Govt of India in its written reply to a question in Loksabha has stated that Telangana’s Debt to GSDP ratio is 17%. State debt is well within FRBM limits & fiscally prudent. (sic)”

Among all the states, Telangana has the second-lowest debt to GDP ratio among other states. Maharashtra occupied the top slot with the lowest ratio of 16.9 per cent. Behind Telanaga was Karnataka with debt to GDP ratio of 18.7 per cent and Assam with 18.9 per cent. Gujarat was in fifth position with 19.2 per cent. The highest debt to GDP ratio was recorded by Jammu and Kashmir with 48.2 per cent followed by Punjab with 39.9 per cent. Meanwhile, the Centre’s debt to GDP ratio was a whopping 48 per cent. The statistics were revealed by the Union minister of state for finance Anurag Thakur in the Parliament.